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Technology Stocks : Advanced Radio Telecom (ARTT) -- Ignore unavailable to you. Want to Upgrade?

To: Bernard Levy who wrote (653)	5/11/1999 7:49:00 AM
From: GVTucker	Respond to of 1176

Good points, Bernard. In regards to the large amount of dark fiber capacity that is currently being added, I'd agree that there is certainly the potential for this capacity to be an albatross for the QWST's of the world rather than an asset. The risk-reward for that kind of market cap is at best aggressive. Similarly, for the wireless arena, there is certainly the potential for excess capacity in the future. But we aren't even close to approaching the excessive capital investment of the long haul area. And that means that there is probably more time (and profits) to be made. That doesn't mean that valuation can simply be ignored, as you properly note. We first had a little discussion on this a couple of months ago: Message 5501359 techstocks.com My point then was that the market cap differential was far greater than the difference in the execution of the WCII and ARTT would warrant. The price of ARTT then was about $6, the price of WCII was in the low 30's. Even though the market cap differential has closed somewhat, there is still better risk/reward for ARTT. (IMO, of course) If ARTT is compared with TGNT or NXLK, then the disparity is even greater, even though, with proper funding, ARTT could be at TGNT's level of market penetration within months. When/if that proper funding happens, the valuation disparity should narrow further.

To: Bernard Levy who wrote (653)	5/11/1999 12:56:00 PM
From: SteveG	Read Replies (1) \| Respond to of 1176

Bernard- (fwiw, written this AM but post didn't take at that time) I agree with your ARTT skepticism but for different reasons. I don't think an equity partner has to or will pay up much, if at all, for a piece of ARTT. I think a deal is announced soon, very likely this week, but IMO it would be at a discount to 20, and possibly to 13 (at least according to the tape). There is a DCF analysis (in fact the only DCF that I know of) which has ARTT 12-month valued at $20 POST-funding, so I suspect the range of equity stakes would be somewhere in this discounted range of $11.5 (~10% discount to current) to maybe $17 (~15% discount to projected POST-funding DCF). But from both deal logistics and the tape, I'd say it's more likely to be on the lower end, so would guess $12-$16 as a semi-WAG. What the stock does following an announcement, IMO would depend on the strategic strength of the partner/partnership, and how much fast-money "deal" premium is already in the stock, expecting higher levels. Regarding your points: True, there is arguably a current backbone glut. But trust that just as quickly as you can fill a 1 Gig harddrive, there will be high resolution video and other bandwidth intensive data applications that will fill those pipes. And if the Gilderian view of throwing dumb bandwidth at bottleneck problems (vs router/CPU intensive core-edge bandwidth management) is even partly correct, we'll (especially businesses) get accustomed to logging onto a ubiquitous always highband "dialtone" - but ONLY when the last mile is solved, and IMO there will soon be a great need for much more hi-band local access. I disagree with a previous point that ARTT has enough bandwidth (ultimately for an IXC). Anyone buying ARTT would probably need to buy TGNT. BTW, investors are loving hearing the NXLK story on roadshow. I expect it and the established players go higher. ARTT might even feel some collateral interest once they get this "deal" and it's expectations behind them, but IMO, no matter who they partner with, if the equity price isn't a lot higher than here, we see selling short term. (fwiw, I'm still involved, but a lot less in taking profits last Friday and yesterday. Disclaimer: 1) I am just a trader on ARTT and think the stock COULD go higher longer term. 2) Do your own due diligence)